The article “Be Wary of Private Capital Markets” was originally published on MoneySense on March 18, 2016.

Average investors now have options previously restricted to the rich – with all the risks

When Ontario joined other provinces with a move to loosen restrictions for investing in private capital markets earlier this year, it opened the floodgates to millions who may not have qualified previously. Similar changes have come or are coming to Alberta, Saskatchewan, Quebec, New Brunswick and Nova Scotia. Until now, it’s primarily been the wealthy who have had access to alternative investments in private markets. While returns with these products can be higher, so too can the risks.

In the past, an investor required financial assets of at least $1 million, income in excess of $200,000 in the past two years ($300,000 combined with a spouse), or a net worth of over $5 million to get into private capital markets. Now anybody can invest up to $10,000 annually—and so-called “eligible investors”  can invest up to $30,000 provided they have $75,000 of personal income in the past two years ($125,000 combined with a spouse), or $400,000 in total net assets. Want an even bigger piece of the action? Eligible investors who obtain suitability advice from a licensed exempt market professional can invest up to $100,000 every year.

To be sure, the private capital market is appealing for those seeking out unique investments like green energy or private equity. There are also more conventional investment options like mortgages and real estate—but with the potential to earn higher returns since costs involved with raising private capital are lower.

Less desirable, however, is the fact that private investments aren’t always as transparent as publicly traded securities. And they may be less liquid, require holding periods or have little secondary market for selling.

Few investors will hear about private capital market investments from their advisors, who may not be licensed or approved to offer them. But that’s probably a good thing, since many investors would be ill-suited for these products. Only seasoned investors with diversified core portfolios should consider exploring what they have to offer. There’s no requirement for eligible investors to obtain suitability advice, but they should get advice from an exempt market professional.

– Updated to correct the fact that Ontario was not the first province to loosen restrictions for these investments.

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto, Ontario. He does not sell any financial products whatsoever.